Lembaga Penjamin Simpanan (LPS) delivers the latest news related to the establishment of Lembaga Penjamin Polis (LPP) in the insurance industry. Chairman of the board of Commissioners of LPs Purbaya Yudhi Sadewa said that his party has recruited executive directors for insurance, including team members within LPP. Purbaya ensures that by the end of this year all LPP regulatory framework will be ready. “Now we are still in discussions with industry and other authorities, OJK and [Ministry of] Finance as well to determine the most appropriate form of what kind of policy guarantee program. But this is going on and I think the progress is faster than we thought,” said Purbaya when met in Jakarta, Thursday (29/2/2024). As is known, the LPP program is a mandate in Law Number 4 of 2023 concerning the development and strengthening of the financial sector (PPSK law).
Public asset insurance or state property
In the regulation, it is stipulated that the implementation of PPP will take effect five years from the moment this law is promulgated, namely 2028. The PPSK law itself was passed on January 12, 2023, meaning that this regulation has been running for one year. Purbaya said that currently his party is discussing the rules related to the number of policies that will be guaranteed by LPP, whether it will be equated with deposits guaranteed by LPS. “Because there are different views there. The others are also previously decided and may be decided again what kind of insurance companies are allowed to enter, the definition of healthy will be like what, ” he said. Read Also the LPs boss’s recognition of Jokowi’s government’s economic growth is lower than the era of President SBY the Brokers Association reveals the reality of credit insurance that is shunned by the health insurance industry and the shadow of a surge in medical inflation he said that LPS will conduct random health checks on insurance companies, namely a year before implementing LPP in 2028. “If everything is good, we accept it, but if out of 10 we test but nine are bad then we will check again,” he said. Meanwhile, one of the levels of health insurance companies will be measured from the solvency ratio or risk-based capital (RBC). However, Purbaya revealed that the RBC ratio is still in the discussion stage, where the direction of RBC talks is in the range of 120% to above 180%. “Of course, even though the RBC is good in 2027, it will be given its list to us, as long as we will test randomly, it is really good or not,” he explained. Purbaya explained that this was done to ensure that not many insurance companies collapsed in the first year of the policy guarantee program. “Then the credibility of the LPP is lost. And, the money is not enough because the dues have not started and only a little,” he added. Later, Purbaya also explained that unit-linked products aka Paydi and investment products are not guaranteed in this program, but only guarantee insurance protection. Nevertheless, the type of protection in question is still in the discussion stage. “If the economic count is [unit-linked] the risk is not clear, like we guarantee people’s investment, it’s very good if the investment is guaranteed, there is no loss, profit continues,” he explained. On the other hand, Purbaya said that there are a number of obstacles in carrying out the mandate to guarantee insurance policies, one of which is that the LPP has not been formed. Another obstacle is the incomplete data of insurance companies. As a result, IDIC must complete the data which is done by sharing data between IDIC and Financial Services Authority (OJK). “Furthermore, insurance companies are not ready, so should be given time to resolve themselves to improve management and business models. That’s still enough time until 2028, ” he concluded.